How soon we forget. Fifteen years ago, the world's eyes turned to Thailand as what would become known as the Asian financial crisis began here and quickly unfolded across the region, ending a period of business euphoria, if not irrational exuberance, about seemingly unstoppable Asian economic growth and the so-called Asian economic miracle.
The bubble burst first in Thailand, after a decade of economic growth averaging 9% per year _ by some measures the highest rate for any nation in the world at that time. Without sufficient foreign currency reserves to defend the baht, Thailand was forced to float its currency in July 1997. The Thai currency ultimately fell to 55 baht from a peg of 25 baht to the US dollar.
Thousands lost jobs as construction projects halted, businesses closed shop, and a once booming economy was brought to its knees. The crisis spread, as the value of currencies and equities in Indonesia, South Korea and elsewhere plummeted, and companies reassessed investments and operations in the region.
Today, Asia has mostly recovered. Yet, 15 years on, there is a new euphoria, with again Bangkok at its heart. This time though, the focus is west of the border in Myanmar.
With Thailand serving as a key gateway to Myanmar, more and more companies and investors are clamouring to find their way to Yangon to talk shop. They hope for the start of a new chapter in the tale of Asia's economic growth, a "Myanmar miracle" so-to-speak _ one to complement earlier chapters on Singapore, Taiwan and South Korea.
For Japanese, Korean and now western companies no longer constrained by public sentiment or US or European economic sanctions against operating in the once pariah nation, the question remains, however, is this a "Myanmar bubble" or the start of a Myanmar economic miracle?
A recent Net Impact seminar at the Sasin Graduate Institute of Business Management posed the question as "Myanmar: Magic or Miscue?" Certainly, opportunities once dominated by companies from China may well be opening up. Just recently, General Electric signed a medical equipment deal with two hospitals in Myanmar, becoming the first US company to restart business in the nation since Washington eased some of its sanctions.
Representatives from business and the development world are rushing in to scope out opportunities for involvement, often with Thailand as their base. Thai enterprises after all have a track record already of involvement in Myanmar. The advent of the Asean Economic Community in 2015 also positions Myanmar possibly as another lower-cost production base for elsewhere in the region, as well as a market in its own right.
International finance institutions such as the World Bank _ although still unable to lend to Myanmar due to arrears on past lending as well as continued policy constraints _ and aid and development agencies are also rushing in to set up shop.
One can understand why. In an initial assessment by the Asian Development Bank, the message is clear: the infrastructure of a once rich nation was left to deteriorate through the decades. The 1962 adoption of a "Burmese Road to Socialism" was a road to ruin, with the economy coming to a virtual standstill.
According to the ADB staff assessment, significant opportunities exist today across the board to invest in and upgrade Myanmar's energy, transport, urban development and water, agricultural and natural resources, and education sectors. Mining, hydropower development and forestry are also identified as priority sectors with a caveat. In these areas, a compromise, the ADB assessment argues, will need to be reached between the country's overall economic development and long-term conservation of its resources.
Much has been written about the extensive role of China in Myanmar and the rise of large emerging economies Brazil, Russia, India and China _ BRIC. Yet, as elsewhere, it is not just China that companies must contend with. Businesses also face what I have termed a new lower-cased "bric" that poses perhaps an even larger challenge _ bureaucracy, regulation, interventionism and corruption.
New entrants in Myanmar face an uncertain bureaucracy, regulations that are unequally applied or enforced when they exist at all, interventionism by government at the expense of market forces, and crony capitalism, if not outright corruption. The reemergence of ethnic and religious tensions also suggests the added challenge of sectarianism.Yet, the saying goes, without risk, there are no rewards.
How can multinationals invest in a way that helps ensure the long-held dream of doing business in Myanmar doesn't become a nightmare? How also to invest responsibly, when there are so many grey areas, and so few rules and procedures in place?
While at the ADB, I spoke regularly on the importance of a focus on the "three Ps of responsible development", namely a focus on people _ on results and on ensuring that development efforts and dollars ultimately reached the people most in need; on planet _ on ensuring that development efforts did not short-change the future for the present, particularly when it came to natural resources extraction; and on partnership _ on ensuring that development efforts were done in coordination not just with other development agencies but also increasingly with civil society and the private sector.
The private sector played a key role in a country's emergence from poverty was not without its detractors.
As the Asian economic crisis spread 15 years ago, new scrutiny came to bear on the roles of governments and the private sector, including financial institutions and speculators, in building and bursting an economic bubble.
Companies and aid agencies poised to descend on Myanmar, should think through not just their approach to, but also how best to manage their risks in, what remains very much a frontier state with weak institutions and governance.
Executives, shareholders and stakeholders must think through not just how much money is to be made in Myanmar, but also how money is to be made.
Development agency representatives must likewise think though not just how much assistance is needed, but how it will be delivered, and to what effect. Whether or not we are indeed witnessing a "mad" rush to Myanmar, one lesson we should not forget is that, in the public and private sectors, being first in does not always guarantee the best and most sustainable results.
*Curtis S Chin is a senior fellow and executive-in-residence at the Asian Institute of Technology, and a managing director with RiverPeak Group. He served as US ambassador to the Asian Development Bank from 2007 to 2010.
By Curtis S Chin*
26 July 2012